South Africa’s economy is under a lot of strain.
reverted to a calendar year deficit for the first time in three years during 2022.
“In terms of the demand side of GDP, exports made the biggest negative contribution to real GDP in Q4 , in part due to logistical constraints caused by the more than ten-day Transnet strike during October,” the BER said. “Given even more intense load-shedding so far in 2023Q1 relative to 2022Q4, South Africa is in a technical recession,” the BER said, adding that pressure on the economy is mounting.
“On the heels of SA’s recent greylisting – which S&P said had no bearing on its decision – the outlook cut is another dent to investor confidence in South Africa,” the BER said.A technical recession for South Africa spells bad news for the longer-term GDP growth outlook. “A ramp-up of green energy investment is one factor that argues against a technical recession. In addition, although the sectors most exposed to the increased intensity of load-shedding may contract again in 2023Q1, we do not see the finance sector repeating the large Q4 decline,” it said.
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